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Question
Stephanie purchased a corporate bond that matures in three years. The bond has a coupon interest rate of 9 percent and its yield to maturity is 6 percent. If market interest rates remain constant and Stephanie sells the bond in 12 months, her capital gain from holding the bond will be:
a. positive because she purchased the bond at a discount and the bond price will approach its face value as it nears its maturity.
b. negative because she purchased the bond at a discount and the bond price will approach its face value as it nears its maturity.
c. positive because she purchased the bond at a premium and the bond price will approach its market price as it nears its maturity.
d. negative because she purchased the bond at a premium and the bond price will approach its face value as it nears its maturity.
e. positive because she purchased the bond at a discount and the bond price will approach its market price as it nears its maturity.
Answer
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Related questions
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